International student drop-off leads to oversupply of rental properties

24 July 2020 | Investment

The lockdowns and subsequent travel restrictions imposed across the globe as a result of Covid-19 are preventing international students from coming to the UK to study.

This is having an impact on the rental market – particularly in London – causing rents to fall due to an oversupply of available properties.

According to Chestertons, average rents in the capital have fallen off by around 10%-15% and the lack of overseas students is one of the principle contributors.

The agency says that over the past ten years, some 30% of its tenants between June and September have been international students with ‘generous budgets’, with areas such as Camden, Bloomsbury and Knightsbridge noted as particular hotspots.

It says that over the first six months of this year, it has housed 48% fewer tenants when compared to the same period in 2019.

There were an estimated 375,000 higher education students in London in the 2018/19 academic year according to the Higher Education Statistics Authority (HESA), nearly one third of which were from overseas.

Across the capital, some universities are planning to keep campuses open and operate with strict social distancing guidelines, while others will offer online courses.

Major universities in the capital – Imperial, London School of Economic, King’s College and University College London – have announced plans to be open and ready to teach online and in person at the start of the new academic year in September, with enhanced safety measures.

Head of lettings at Chestertons, Richard Davies, says that with travel restrictions lifting and two months left of the peak summer lettings market, there is some hope that overseas students could return to the capital and provide a boost to rental prices.

There has also been a suggestion that domestic students may be able to fill the gaps left by their international counterparts, although this may be prevalent outside of the capital.

Data from student accommodation provider Host shows that almost 6,000 students have already signed up to live in its 35 student halls located across the UK from September.

UK students account for half of these sign-ups – a rise of 5% when compared to last year.

The accommodation provider also reveals that despite a clear drop-off in demand from overseas students, bookings from some countries are holding up well.

Bookings from China, which alongside India accounts for the largest number of overseas applicants to UK universities, are currently on a par with last year, representing 22% of all rooms booked, with the proportion of students coming from Hong Kong up by 50% from last year.

Based on current bookings, Host will be accommodating students from more than 100 countries and every continent from September, including students from Kyrgyzstan, Guatemala, Laos, Mozambique, Ethiopia and the Faroe Islands.

“Considering the unprecedented uncertainty caused by the global health crisis and the impact this is having on young people at key stages of their lives, it is encouraging that students are showing a resilient attitude towards moving away from home to study and continuing their higher education journey,” says John Ripley, operations director at Host.

“We expect more students than ever before to wait until they have their grades this year before applying through clearing so the full picture is not yet clear but our number of bookings are not too far off what they were at this stage last year.”

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–> This post has originally been featured in Property Investor Today.